Kinetik Holdings Inc. · NYSE:KNTK
Kinetik — Investor Presentation (August 2023)
24 slides from Kinetik's investor presentation, August 2023
Slide 1: Investor Presentation August 2023
Investor Presentation August 2023
Slide 2: Forward looking statements
Forward looking statements This presentation includes certain statements that may constitute “forward-looking statements” for purposes of the federal securities laws. Forward-looking statements include, but are not limited to, statements that refer to projections, forecasts or other characterization
Slide 3: Company highlights
Company highlights Leading, pure-play Permian midstream company • Only large-scale, publicly-traded, pure-play Permian midstream business • Focused on gathering & processing and long-haul transportation Super-system in the Delaware Basin with integrated • >2 Bcfpd of processing capacity in the Delaw
Slide 4: A full-service, integrated midstream model
A full-service, integrated midstream model Fee-based business with mission critical infrastructure Produced Water Water Pipelines Water Disposal Well Permian Highway and Delaware Link Gulf Coast Express Intrabasin Residue Gas Pipeline Residue Gas Takeaway Natural Pipelines Gas Natural Gas Pipelines
Slide 5: Pure-play Permian midstream company positioned for growth
Pure-play Permian midstream company positioned for growth Extensive Delaware in-basin gathering system feeds downstream pipeline assets Combined business opportunistically primed for future growth • Fourth largest processor in the Permian Basin >2 Bcfpd processing capacity • Fee-based crude and wa
Slide 6: The premier Delaware Basin midstream company
The premier Delaware Basin midstream company A vision 10 years in the making New Mexico Gathering Expansion Fully-interconnected, gas G&P system extending from Reeves County, Texas to Lea County, New Mexico Comprehensive treating and blending services across >2 Bcfpd of processing capacity at five c
Slide 7: Highly strategic organic growth projects nearly complete
Highly strategic organic growth projects nearly complete Capital spend in 2023 lays foundation for a robust 2024+ New Mexico Gathering Expansion Delaware Link Permian Highway Pipeline Expansion Kinetik Gas Gathering System New Mexico Gathering Expansion Kinetik Processing Complexes 20+ miles Waha Hu
Slide 8: 2023E Capital Expenditures Guidance
2023E Capital Expenditures Guidance Expect to be at top end of Guidance range due to incremental expenditures associated with PHP 2023E Capital Expenditures(1) ($mm) $255 to $275 $490 to $540 Guidance Key Drivers • High-pressure gathering projects: New Mexico expansion and remaining spend on 2022 co
Slide 9: Capital efficient operating leverage on display
Capital efficient operating leverage on display Strategic pipelines translate into significant upside in ratable cashflow and future credit and dividend benefits Kinetik Processing Volumes and Capacity (Bcfpd) Pipeline Transportation Adjusted EBITDA(1) ($mm) 0.3 0.3 0.2 0.2 Total spare plant capacit
Slide 10: Expect to achieve high end of 2023E Adjusted EBITDA Guidance
Expect to achieve high end of 2023E Adjusted EBITDA(1) Guidance Midstream Logistics volumes and new Pipeline Transportation projects drive 2H23 performance Key Drivers to 2023 Growth 2023E Adjusted EBITDA(1) ($mm) Midstream Logistics growth >$900 • March through August weighted development activity
Slide 11: Active risk management hedging program de-risks 2023
Active risk management hedging program de-risks 2023 Remaining 2023E unhedged commodity-linked Gross Profit further reduced to 5% 2023E Gross Profit Sources(1) 2023E Gross Profit Commodity Price Sensitivity(1)(2) +/- 25% Change in Commodity Prices Hedged Commodity 5% Exposure Unhedged Fixed Fee 5% C
Slide 12: Spreads and executed swaps result in attractive cost of debt capital
Spreads and executed swaps result in attractive cost of debt capital Floating interest rate exposure almost entirely fixed through May 2025 Fixed Interest Rate Exposure(1) Annual Interest Expense Sensitivity(1) +/- 1% in Secured Overnight Financing Rate 4% -85% Fixed Fee Fixed 90% +/- $25mm ~90% Fix
Slide 13: Organization structure
Organization structure Management Public Investors 14% interest(1) 50% interest(1) 21% interest(1) 4% interest(1) 11% interest(1) Fully unsecured capital structure • No asset level or structurally senior debt $1.25bn Unsecured (NYSE: KNTK) Revolving Credit • No hybrid securities Facility • New Revol
Slide 14: Accelerated path to achieving our near-term financial priorities
Accelerated path to achieving our near-term financial priorities Ultimate focus on free cash flow generation and accelerating shareholder returns Kinetik’s action plan 2023E Adjusted EBITDA(1) outperformance Continued success and expanded customers 3.5x leverage(2) / Investment Grade 2023 Exploring
Slide 15: Our compelling value proposition
Our compelling value proposition Kinetik’s dividend yield and 2024E Adjusted EBITDA(1) growth rank highest among peers Current Dividend Yield(2) 10% 9% Large Cap Peer G&P Peer Kinetik 9% 8% 8% 8% 7% 7% Peer Median: 6% 6% 5% 5% 4% 2% Peer A Peer B KNTK Peer C Peer D Peer E Peer F Peer G Peer H Peer I
Slide 16: 2022 Sustainability Report: Delivering Today. Accountable for Tomorrow.
2022 Sustainability Report: Delivering Today. Accountable for Tomorrow. Advancing a safer, cleaner and more reliable energy future ®
Slide 17: Commitment to environmental and social sustainability initiatives
Commitment to environmental and social sustainability initiatives Achieved 2022 sustainability performance targets resulting in a modest interest expense reduction beginning in July GHG Emissions Intensity Reduction(1) Methane Emissions Intensity Reduction(1) Female Corporate Officer Positions 6% 20
Slide 18: Kinetik at a glance
Kinetik at a glance ONE OF THE LARGEST MIDSTREAM OVER 35 COMPANIES IN THE DELAWARE BASIN CUSTOMERS Offices in Midland and Houston, TX INTERESTS IN 4.7 Bcfpd (2) OPERATES 4 MAJOR COMPLEXES EQUITY INTERESTS IN & OVER 1,800 MILES OF PIPELINE LONG-HAUL PIPELINES: OF RESIDUE GAS TAKEAWAY 55.5% OF PHP 550
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Slide 20: Glossary of terms
Glossary of terms • Adjusted EBITDA (EBITDA) is defined as net income including noncontrolling interests adjusted for interest, taxes, depreciation and amortization, impairment charges, asset write-offs, the proportionate EBITDA from our equity method investments, equity in earnings from investments
Slide 21: Non-GAAP Measures Reconciliation
Non-GAAP Measures Reconciliation Three Months Ended Six Months Ended June 30, June 30, 2023 2022(1) 2023 2022(1) Net Income Including Non-controlling Interests to (In thousands) Adjusted EBITDA Net income including noncontrolling interest $ 71,668 $ 131,448 $ 75,967 $ 152,837 Add back: Interest expe
Slide 22: Non-GAAP Measures Reconciliation
Non-GAAP Measures Reconciliation Six Months Ended June 30, 2023 2022(1) Reconciliation of net cash provided by operating activities (In thousands) to Adjusted EBITDA Net cash provided by operating activities $ 231,047 $ 268,918 Net changes in operating assets and liabilities 47,040 14,498 Interest e
Slide 23: Non-GAAP Measures Reconciliation
Non-GAAP Measures Reconciliation Three Months Ended Six Months Ended June 30, June 30, 2023 2022(1) 2023 2022(1) Distributable Cash Flow (2) (In thousands) Adjusted EBITDA (non-GAAP) $ 207,985 $ 207,918 $ 395,493 $ 348,709 Proportionate EMI EBITDA (74,481) (71,340) (146,348) (112,081) Cash distribut
Slide 24: Non-GAAP Measures Reconciliation
Non-GAAP Measures Reconciliation June 30, 2023 March 31, 2023 Net Debt(1) (In thousands) Current portion of long-term debt, net $ — $ — Long-term debt, net 3,625,799 3,511,648 Plus: Debt issuance costs, net 24,201 25,352 Total long-term debt 3,650,000 3,537,000 Less: Cash and cash equivalents 2,237
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